In the age of globalization, conventional wisdom holds that supply chains prioritize labor-cost arbitrage over mere distance.

Geography, however, could make a comeback. Triple-digit oil provided
the first intimation of this. Jeff Rubin, chief economist for CIBC
World Markets, estimates $150 crude oil boosted the cost of shipping
imports to the U.S. by 11%, costing roughly as much as trade tariffs in
the 1970s.

Crude now trades under $50 a barrel, but the crash reflects
faltering demand more than rising supply. When demand recovers, oil
prices will, too.

Marc Levinson, author of container-shipping history "The Box,"
suggests the world also is hitting the limits of economies of scale in
logistics, citing bottlenecks at ports and congested road and rail
networks. These impose costs and delays and, as supply chains have
become more complex, more potential points of failure. Initiatives
forcing ships to reduce harmful emissions also will weigh on economics.

Innovation could change the equation again. But the ultimate facts
of mass and distance are inescapable when it comes to rethinking
logistics.

One answer will be shorter, regional supply chains -- a phenomenon
observed in changing sources of U.S. imports during the 1970s oil
shocks. That ought to have positive implications for exporting
economies such as Mexico, while China could suffer.

U.S. workers cheered by the prospect of jobs returning home,
however, shouldn't be too jubilant: Globalization and labor arbitrage
aren't going away. And rising supply-chain costs mean U.S. workers will
pay higher prices for the goods they buy.